Truist(US:TFC)2024-07-22 16:06Financial Data and Key Metrics Changes - Adjusted revenue grew by 3% on a linked quarter basis, driven by a 4.5% increase in net interest income due to balance sheet repositioning [6][47] - Adjusted net income available to common shareholders was $1.2 billion or $0.91 per share, excluding certain gains and losses [11][16] - The CET1 ratio increased from 10.1% to 11.6% due to the sale of Truist Insurance Holdings and organic capital generation [22][47] Business Line Data and Key Metrics Changes - Average loans decreased by 0.7% sequentially, with commercial loans down by $1.3 billion or 0.7% and consumer loans down by $1 billion or 0.9% [17] - Adjusted non-interest income decreased by $8 million or 0.6% relative to the first quarter, primarily due to lower investment banking and trading income [19] - Digital checking account production among Gen Z and millennial clients increased by 42% year-over-year [7] Market Data and Key Metrics Changes - Average deposits decreased by 0.3% sequentially, with non-interest bearing deposits down by 1.2% [18] - Total deposit costs increased by 6 basis points sequentially to 2.09% [18] - The net charge-off ratio decreased by 6 basis points to 58 basis points, reflecting lower consumer losses [20] Company Strategy and Development Direction - The company is focused on growing its core consumer and wholesale banking businesses while maintaining expense discipline [12][26] - Investments in digital capabilities and enhancements to enterprise platforms are aimed at improving client engagement and satisfaction [7][28] - The company plans to return capital to shareholders through a $5 billion share repurchase program [12][24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth opportunities despite current slow loan demand [12][29] - The company anticipates a 1% to 2% increase in revenue for Q3 2024 and expects net interest income to rise by 2% to 3% [23][24] - Management acknowledged the need for cautious optimism regarding client activity and loan demand [33][35] Other Important Information - The company completed the divestiture of Truist Insurance Holdings, generating significant capital for growth and shareholder returns [14][42] - The company made a $150 million charitable contribution to the Truist Foundation from the proceeds of the sale [42] - The company is committed to maintaining flat adjusted expenses in 2024 compared to 2023 [54] Q&A Session All Questions and Answers Question: What are the drivers of sequential NII growth over the next few quarters? - Management expects growth to be driven by increased client loan demand and core balances, but remains cautious about timing due to current market uncertainties [33][35] Question: When do you expect loan growth to turn positive? - Management indicated that while loan balances are stabilizing, they do not expect significant growth in the near term due to client caution [65][66] Question: How will another rate cut affect NII guidance? - Management noted that while one rate cut is expected in November, additional cuts could provide benefits, but they remain cautious about the timing and impact [98][99] Question: What is the outlook for investment banking revenues? - Management expressed confidence in the investment banking business, noting that they are gaining market share and expect continued momentum [75][102] Question: What is the expected CET1 ratio moving forward? - Management confirmed that the CET1 ratio is expected to remain stable at 11.6% unless growth opportunities arise that require additional capital [83][84]